Do performance related bonuses really motivate?

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If employers want to get the best out of their people, they need to understand what really motivates them.

A recent study by the Institute of Leadership and Management (ILM) has suggested that performance related bonuses are not the motivating force we might have expected.

The majority of the 1000 employees surveyed indicated that financial incentives were less likely to motivate them than other factors such as:
  • Enjoyment of their job
  • An appropriate financial package, i.e. base salary, pension, benefits
  • Flexibility – part time workers were more motivated, engaged and positive
  • Relationships with their managers
Therefore, instead of performance related bonus schemes that are relatively ineffective for the majority of employees, focusing on non-financial aspects of the workplace that really matter to people is more likely to result in highly motivated, effective employees. Initiatives that will help to achieve this include:
  • Training managers to create a culture where people feel valued and listened to
  • Improving the office environment
  • Encouraging innovative and creative thinking
  • Allowing employees to have a level of autonomy in their role
  • Embracing a positive attitude to flexible working
  • Developing managers to do more of the basics – good management, interpersonal skills, coaching, effective feedback
  • Appropriate base pay and benefits
Concentrating on the things that really matter to people will help employers to retain key talent whilst creating an environment where people are happier and more effective.

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